Taco Salad Manufacturing, Inc., plans to announce that it willissue $2.09 million of perpetual debt and use the proceeds torepurchase common stock. The bonds will sell at par with a couponrate of 8 percent. The company is currently all-equity and worth$6.56 million with 192,000 shares of common stock outstanding.After the sale of the bonds, the company will maintain the newcapital structure indefinitely. The annual pretax earnings of $1.33million are expected to remain constant in perpetuity. The tax rateis 24 percent.

  

a.	What is the expected return on the company’s equity before theannouncement of the debt issue? (Do not round intermediatecalculations and enter your answer as a percent rounded to 2decimal places, e.g., 32.16.)
b.	What is the price per share of the company's equity?(Do not round intermediate calculations and round youranswer to 2 decimal places, e.g., 32.16.)
d.	What is the company’s stock price per share immediately afterthe repurchase announcement? (Do not round intermediatecalculations and round your answer to 2 decimal places, e.g.,32.16.)
e-1.	How many shares will the company repurchase as a result of thedebt issue? (Do not round intermediate calculations andround your answer to 2 decimal places, e.g., 32.16.)
e-2.	How many shares of common stock will remain after therepurchase? (Do not round intermediate calculations andround your answer to 2 decimal places, e.g., 32.16.)
g.	What is the required return on the company’s equity after therestructuring? (Do not round intermediate calculations andenter your answer as a percent rounded to 2 decimal places, e.g.,32.16.)